A new secondary market is emerging amidst the 21st century vinyl revolution that is fascinating to watch: something I'll dub the Millennial Budget Line Back Catalog.
Frankly, I've been waiting for this to happen.
This newfangled vinyl industry has held off on that sort of thing for a while, keeping prices fairly high on newer artists and offering only the most modest of discounts along the way. Dramatic pricing cuts on select titles is a practice that used to be commonplace in the earlier days of vinyl (and with CDs, for that matter) -- lowering prices to keep established titles selling. Lower prices helps to entice new fans to buy the "back catalog," recordings which may have already paid for itself in terms of ROI (Return On Investment, for those of you readers who are not particularly business minded) to the artist and/or record label.
Or, simply, the music has stopped selling for various and sundry reasons and the labels, stuck with too much inventory, reduce prices way down, selling at a loss to clear out the warehouse.
This sort of budget music marketplace was at one point a pretty sizable and even important sub-industry-within-the-music-industry.
For those of you to young to remember that earlier wave, a mini primer on the old school music biz might be enlightening:
So, for example, if a particular record didn't sell enough copies to make money for label -- ie. recouping expenses, making a profit -- the struggling artist would frequently essentially be held responsible for these costs and thus got into debt to the label. The artist might disappear (as many did, opting for alternative careers) or eventually would get lucky and have a big hit to repay said old debts.
In the interim while waiting for their investment money to return one way or another, the labels would take action to stimulate quicker sales of said older product. Often they would put a permanent mark on the album's corner -- a drill hole, a saw cut, a punch out, etc. -- and the album would thus be marked for eternity as a "cut out." These cut out "overstock" titles were marked as such so they couldn't be resold at full price (in theory) and was a way for labels to reduce inventory (and effectively get the failed albums off the accounting books as a write off). The albums would often be sold in bulk to overstock distributors who got them out to the stores, often in droves, selling for $1.99 per disc.
Cut out bins were heaven for record collectors (like me!) on a budget! And this practice wasn't just limited to vinyl -- again, there were plenty of cut outs and budget releases in the CD world as well.
But... that was then and this is now....
Fast forward and we're well into the new Millennium and the way the music industry operates is a very different animal. We don't really have cut out bins anymore, for better or worse.
Artists are generally wiser about their careers today and increasingly not signing those sort of life-damning contracts that were "de rigueur" in the industry back in the day. Now, many artists raise their own funding, paying for much of their own marketing, promotions and other stuff the labels used to do in order to keep costs under control, at least until they reach a certain level of success that they can afford the old school support mechanisms. They even "crowd-source" the funding of new releases, ensuring sales and also involving the fans along the way. Heck, the whole indie rock movement spurred a generation of DIY music makers who refused to be chained to the old ways of doing things. Some have made a cottage industry out of it (such as Guided By Voices and their fearless leader Robert Pollard).
Things have changed for stores too these days (the ones that still exist, anyhow). From what I've been told by several retailers, stores are no longer able to return albums that don't sell -- they must purchase them outright. So, it is up to the extra savvy buyer at the modern day music store to be able to foresee what will sell and what won't.
When they do get it right, it is great. Stuff sells out. And then they order more as they need it. People go out to the stores looking for things and there is a perception that an album is "hot" ...
It all seems like a win win situation for the artist and label alike this time 'round...
If the stuff doesn't sell, then its not really much sweat for the label since they got paid up front.
However, stagnant stock can do some damage to the artist's brand and image -- if there is too much stock sitting there obviously not selling through, it just sits there looking lame as if the artist is not so popular anymore.
Epic fail, dude. No one wants to buy your music.
A used record store manager told me something interesting recently: when he has two copies of a record on the shelves, they don't sell. When there is one album on the shelves, it is more likely to sell because it seems to the customer to be less likely to be there the next time they go shopping. Impulse purchase psychology stuff...
All that said, here and now here we have something curious emerging in this new Millennial version of the vinyl music industry: in recent months I have seen several stores lowering prices on stuff that was ridiculously overpriced to begin with -- including many Record Store Day editions -- trying to clear out the stock to make room for other better stuff. (Remember, sometimes good things simply don't sell because they were priced too high in the first place).